Although current clients are your bread and butter, and the best possible sources for vital repeat business, new business referral clients provide opportunities to grow your business while covering for financial shortfalls if current customers decide to shop elsewhere.
Small business referrals are extremely powerful because when they come to you, they have already been presold on your business and your products or services. Here are some other advantages to referrals in business:
- Referrals in business are less expensive than many other kinds of marketing.
No costly Yellow Pages ads to run, no billboards to erect, and no extravagant mail-order campaign to launch.
- New Business Referrals cost little or no money to obtain.
And maintaining a favorable relationship with the people who give you new business referrals means simply doing good work for them and letting them know from time to time that you appreciate their business (perhaps with a discount on your products or services, a small gift, or some other token of your appreciation).
- Referred customers trust you.
When people turn to their trusted friends and business acquaintances for advice on who to hire for a particular job or to provide a particular product, they automatically tend to believe the recommendations that they hear.
As the saying goes, you have only one chance to make a first impression. When someone recommends you, you’ve already made a positive first impression with your client-to-be.
- Referred customers are ready to buy from you.
When people ask their friends and business acquaintances for referrals in business, they’re ready to buy. People wouldn’t ask if they weren’t.
And because people trust the opinion of those they ask, most people go no further in their search for sources than the person or business recommended to them.
Identifying Potential Referrals
So where do you find small business referrals? Here are the most common places:
- Family and friends:
If you don’t yet have current clients, family and friends are a great place to start for getting small business referrals.
Make sure that everyone you personally know is familiar with your new venture — what it is and what you do — and that you’re looking for customers to help get it off the ground.
Most will be more than happy to help.
- Current clients:
If you’re doing good work for your current clients (and you are, aren’t you?), they will refer friends and business acquaintances to you when asked for recommendations.
Just make sure you don’t let your work with your current clients suffer as you take on new work — you need to walk a very fine balance in your business between delivering on your current work and developing new work.
To help ensure that your clients will want to share you with others (don’t laugh; some may want to keep you all to themselves), be sure to meaningfully thank them for the new business referrals they make and consider providing additional incentives for providing them.
Examples of incentives depend on the kind of business you have but could include half off their next order or a free automobile detail.
- Business associates:
Vendors and other non-client business associates can be another rich source of referrals.
If you have a good reputation in your field, and if they like you, they will gladly tell their business associates about you.
Of course, they will be equally happy if you send some business their way, too.
- Other small businesses:
Many home-based businesses are one-person operations and, as such, can have a hard time dealing with the inevitable business peaks and valleys.
Sometimes work is plentiful, sometimes not. In those times when another small business is overwhelmed, a good option is to farm the extra work out to a trusted and proven company — yours.
Why not become the company of choice for other small businesses in your industry?